Material Changes in Facts that Require Notifications Under Commission Regulations Under the Public Utility Holding Company Act of 2005

125 FERC ¶ 61,208

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Joseph T. Kelliher, Chairman;

Suedeen G. Kelly, Marc Spitzer,

Philip D. Moeller, and Jon Wellinghoff.

Material Changes in Facts that Require

Notifications Under Commission Regulations

Under the Public Utility Holding Company

Act of 2005

Docket No. PL09-2-000

ORDER CLARIFYING REQUIREMENT TO NOTIFY COMMISSION OF

MATERIAL CHANGES IN FACTS UNDER THE PUBLIC UTILITY HOLDING

COMPANY ACT OF 2005 AND ALLOWING 45-DAY FILING PERIOD FOR

UPDATED NOTIFICATIONS

(Issued November 20, 2008 )

1.

The Commission’s regulations under the Public Utility Holding Company Act of

2005 (PUHCA 2005)1 currently require persons that meet the definition of a holding

company set forth at 18 C.F.R. § 366.1 (2008) to notify the Commission of their status as

a holding company no later than 30 days after they become a holding company.2 The

Commission’s PUHCA 2005 regulations also provide exemptions from or waivers of

requirements that apply to holding companies.3 The companies that receive certain of

these exemptions or waivers are required to notify the Commission of material changes in

facts that may affect the exemption or waiver.4 It has come to the Commission’s

attention that we may not have provided sufficient clarity regarding an aspect of the

scope of this filing requirement and the purpose of this order is to clarify and provide

guidance on certain filings that need to be made under this regulation.

1 42 U.S.C. §§ 16451 et seq. (2006).

2 18 C.F.R. § 366.4(a)(1) (2008).

3 Id. § 366.3.

4 Id. § 366.4(d).

ion that we may not have provided sufficient clarity regarding an aspect of the

scope of this filing requirement and the purpose of this order is to clarify and provide

guidance on certain filings that need to be made under this regulation.

1 42 U.S.C. §§ 16451 et seq. (2006).

2 18 C.F.R. § 366.4(a)(1) (2008).

3 Id. § 366.3.

4 Id. § 366.4(d).

Docket No. PL09-2-000

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2.

The exemptions in question apply to a number of entities, including certain

passive investors and certain utility operating companies, as well as to certain classes of

transactions. Qualifying entities or classes of transactions are exempt from the

requirements concerning access to books and records found at section 366.2, as well as

the accounting, record-retention, and reporting requirements of sections 366.21, 366.22,

and 366.23 of the Commission’s regulations.5 To receive one or more of these

exemptions, a person must file an exemption notification with the Commission, i.e.,

FERC-65A. The exemption is deemed granted if the Commission does not take action on

the notification within 60 days.6 Persons that do not qualify for an exemption under the

regulations may petition for a declaratory order granting one.7

3.

The waivers in question apply to holding companies that have single-state holding

company systems, as defined in section 366.3(c)(1) of the Commission’s regulations, as

well as investors in independent transmission-only companies and holding companies

with 100 MW of generation or less that is used for their own load or sales to affiliated

end users.8 Qualifying entities receive a waiver of the accounting, record-retention, and

reporting requirements found in sections 366.21, 366.22 and 366.23 of the Commission’s

regulations.9 To receive one or more of these waivers, a person must file a waiver

notification with the Commission, i.e., FERC-65B

h 100 MW of generation or less that is used for their own load or sales to affiliated

end users.8 Qualifying entities receive a waiver of the accounting, record-retention, and

reporting requirements found in sections 366.21, 366.22 and 366.23 of the Commission’s

regulations.9 To receive one or more of these waivers, a person must file a waiver

notification with the Commission, i.e., FERC-65B. The waiver is deemed granted if the

Commission does not take action on the notification within 60 days.10 Persons that do

not qualify for a waiver under the regulations may petition for a declaratory order

granting one.11

4.

The Commission’s regulations specify that if there is any material change in facts

that may affect an exemption or waiver of the type described above, the person that

received the exemption or waiver must notify the Commission of the change within 30

days of the material change. At that time the person must (i) submit a new FERC-65A,

5 Id. § 366.3(b).

6 Id. § 366.4(b)(1).

7 Id. § 366.4(b)(3); accord id. § 366.3(d).

8 Id. § 366.3(c).

9 Id. § 366.4(c).

10 Id. § 366.4(c)(1).

11 Id. § 366.4(c)(2); accord id. § 366.3(d).

Docket No. PL09-2-000

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FERC-65B, or petition for declaratory order; (ii) file a written explanation why the

material change in facts does not affect the exemption or waiver; or (iii) notify the

Commission that it no longer seeks to maintain its exemption or waiver.12

5.

The Commission’s regulations require only notification of those material changes

in facts that may affect an exemption or waiver, but they do not otherwise state when a

notification is required. The Commission wishes to clarify one type of change in facts

that should in all cases be the subject of a notification

he

Commission that it no longer seeks to maintain its exemption or waiver.12

5.

The Commission’s regulations require only notification of those material changes

in facts that may affect an exemption or waiver, but they do not otherwise state when a

notification is required. The Commission wishes to clarify one type of change in facts

that should in all cases be the subject of a notification. If a holding company that has

previously filed an exemption or waiver notification, i.e., FERC 65A or FERC 65B, or

that has received an exemption or waiver through a declaratory order, becomes a holding

company with respect to an additional public-utility company or holding company of any

public-utility company (i.e., obtains the power to vote 10 percent or greater of the voting

securities of an additional company), that holding company should file with the

Commission a notification of material change in facts that describes the additional public-

utility company or holding company of any public-utility company and otherwise

complies with the requirements of section 366.4(d)(1) of the Commission’s regulations

by selecting one of the three possible courses of action set forth in that section. This

filing should be made whether or not a change has occurred with respect to the basis on

which the exemption or waiver was granted.13 We note that the FERC-65 filing

requirements are intended, in part, to serve an informational purpose,14 and the addition

of a new subsidiary company that is a public-utility company or holding company of a

public-utility company represents a material fact that should be reported to the

Commission.

6

ge has occurred with respect to the basis on

which the exemption or waiver was granted.13 We note that the FERC-65 filing

requirements are intended, in part, to serve an informational purpose,14 and the addition

of a new subsidiary company that is a public-utility company or holding company of a

public-utility company represents a material fact that should be reported to the

Commission.

6.

Because not all holding companies may have been interpreting the Commission’s

regulations to require such filings where the basis on which their exemption or waiver

was granted has not changed, and because the Commission has not previously clarified

this requirement for notifications of material changes in fact, we will allow all such

companies to file within 45 days of the date of publication of this order in the Federal

Register a notification of change in material facts which updates the Commission on any

12 Id. § 366.4(d).

13 For example, if a holding company received an exemption from the PUHCA

2005 regulations on the basis of its status as a passive investor of the type identified in

18 C.F.R. § 366.3(b)(2)(i), it should notify the Commission whenever it acquires as a

passive investor interests in an additional public-utility company or holding company

that, upon acquisition, becomes a “subsidiary company,” as defined in 18 C.F.R. § 366.1,

of the passive investor. This filing should be made even if the holding company

continues to qualify for an exemption as a passive investor.

14 Id. § 366.4(a)(2).

Docket No. PL09-2-000

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investments of 10 percent or more of the voting securities of a public-utility company or

holding company of a public-utility company since the time the exemption or waiver was

granted. The Secretary is directed to publish a copy of this order in the Federal Register.

By the Commission.

( S E A L )

Kimberly D. Bose,

Secretary.